EUROPEAN CENTRAL Bank president Jean-Claude Trichet said the ECB unanimously agreed on a €60 billion plan to buy bonds as officials step up their response to the worst recession since the second World War.

“The Governing Council has decided in principle that the eurosystem will purchase euro-denominated covered bonds issued in the euro area,” Mr Trichet told reporters in Frankfurt.

Technical details of how the covered bonds will be purchased, which he denied amounted to quantitative easing or “printing money”, will be announced after the ECB meeting on June 4th.

“I would say at this stage we expect to engage in a programme which could be around €60 billion,” he said.

The bank’s main interest rate, which it cut by a quarter point to a record low of 1 per cent, was not necessarily the lowest point of the cycle, he added.

“We have not decided today that the new level of our policy rates was the lowest level, that we could never cross whatever future circumstances could be.”

He also declined to commit the ECB to keeping rates at a low level for any particular period, and said the central bank would unwind its efforts to stimulate the economy when needed.

“The Governing Council decided today to proceed with its enhanced credit support approach,” Trichet said. “We will conduct liquidity-providing, longer-term refinancing operations with a maturity of 12 months,” he said.

Banks could borrow all the cash they wanted at a fixed rate. Until now, refinancing operations were up to six months only.

“These decisions have been taken to promote the ongoing decline in money market term rates, to encourage banks to maintain and expand their lending to clients, to help to improve market liquidity in important segments of the private debt security market, and to ease funding conditions for banks and enterprises,” he said. – (Bloomberg/Reuters)